Netflix Ditches Qwikster Split

The best policy in business is to avoid making dumb decisions. But the second best policy is to be smart enough to realize when you’ve made a dumb decision and change your mind.

That’s certainly the case with Netflix, which has completely abandoned a rebranding and reorganization process that had some particularly bizarre and counterproductive facets.

The story dates back to July when Netflix decided it was no longer able and/or willing to carry on its $9.99 a month unlimited-DVDs-and-streaming program. Instead it decided customers could choose either DVDs or streaming for $7.99 a month, or stump up the price to $15.99 to keep both.

The online reaction was surprisingly hostile, to the point that Netflix chief Reed Hastings later apologized for the handling of the changes, noting that “many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes… In hindsight, I slid into arrogance based upon past success.”

Hastings immediately followed the apology by announcing an overhaul of the service: the DVD side would now be rebranded as Qwikster, with the addition of video game rentals. What quickly caught the attention of customers was that Qwikster and Netflix would be totally separate: users on the $15.99 deal would not only have two sets of charges, but they’d have to maintain two separate queues. Meanwhile rating a streamed movie would have no effect on suggestions for DVDs, and vice versa.

Writing on another site at the time, I cynically concluded ” Look forward to Hasting’s next apology in a couple of months…” It’s actually taken just three weeks for the about-face.

This time Hastings isn’t screwing about trying to justify anything, and just comes straight to the point: ” It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs. This means no change: one website, one account, one password… in other words, no Qwikster.”

Certainly it’s true that a moment’s thought from the perspective of a customer should have killed the Qwikster separation idea the moment it was conceived. And certainly even a token piece of market research should have seen it rejected. But hey, let’s be generous and at least acknowledge that Hastings didn’t let pride get in the way and has got it right in the end.

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9 Responses to Netflix Ditches Qwikster Split

  1. They just didn't wanna pay Jason Castillo for the twitter account. Here's hopin' the guy's sold it off already and made a few bucks. Either that or gotten a few follower hotties who've jumped his bones. ^.^

  2. Amazing how Hastings is blaming the customers for this, and not taking the responsibility for his company making a bad decision. "It is clear that for many of our members two websites would make things more difficult…" So we're all too stupid to manage more than one website. Thanks alot, Hastings.

    • I think you're reading too much into the statement. Two websites is more difficult. Simple statement of what thousands of customers have stated all over the internet. I don't tend to disagree.

    • As you suggested, I also feel that people are giving Hastings way too much credit here – it isn't that he suddenly become remorseful over having treated loyal customers so badly. Instead, I'll bet that this change of course is purely motivated by plummeting stock value.

      Netflix was already embedded in just about everything but your toaster yet rather than continue to build on the captive audience within that already-installed base, they spurned their loyal fans, got greedy and blew a phenomenal, once-in-a-lifetime market lead.

      Regardless of how much backpedaling they do now, it’ll be nothing short of a miracle if they ever fully recover, especially given how arrogant and cavalier they've been in the past 3-4 months..

      This is pure, swift consumer karma in action. Make room on the loser’s bench, TiVo & Palm!

  3. Possible they hatched Qwikster simply to have an idea they could back out of based on customer feedback. I've argued all along the price increase was justified and Netflix is still the best deal in entertainment, but the splitting of services did seem unnecessary unless the goal is to phase it out.

    • *A* price increase is justified; they more or less doubled the price if you kept both services.
      I think the goal is to phase the DVDs out, but they jumped way to fast. A better way to go would have been incremental price increases over a few years, explaining that they were slowly phasing out the DVDs, but needed the extra income in order to make more available on streaming.

      You're right that it's still the best deal out there, by a fair margin. That's the only reason they didn't go under because of this. If they have any sense, they're investing some of the new revenue in a better PR department.

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